ICER's Rare Disease Drug Policy Report Analyzed

Our experts look at 4 proposed reforms, evaluating each one’s practical viability and impact on payers, providers, patients, and the pharmaceutical industry.

Charles Karnack, PharmD, BCNSP, has served on the front lines of care in the pharmacy and seen his share of rare disease management challenges. He does not need to be convinced that new rare disease treatment innovations and better ways to afford them are sorely needed. He sees how the absence of such impacts the real world.

“Many individuals with rare diseases are on Medicaid and other special assistance programs; we are compelled to get creative. For instance, sometimes we have to use immediate-release tablets instead of more costly sustained-release versions, or we split tablets or crush them instead of using expensive suspensions. We seek generics, if available, and need to take the time to educate patients and caregivers, especially if the patient is a child with special needs.” The challenges don’t stop there.

“Families with a child who requires a special agent find that even switching insurance plans during a job change can be catastrophic,” explained Dr Karnack. “For these families, a move out of state can result in patients being ostracized.” This alone, he said, justifies a move to universal health coverage of rare diseases, doing away with the link between employment, location, and coverage.

The Institute for Clinical and Economic Review  (ICER) published a white paper on April 7, 2022, titled “The Next Generation of Rare Disease Drug Policy: Ensuring Both Innovation and Affordability” that presented 4 proposed reforms—1 of which suggests considering a national treatment program—to address rare disease drug policy. We asked 3 experts—a practicing pharmacist, a physician with medical and pharmacy management expertise, and a benefit design specialist—to analyze each proposal for its practical application and impact on stakeholders. Dr Karnack, assistant professor of clinical pharmacy at Duquesne University in Pittsburgh, PA, was joined by Gary Owens, MD, president of Gary Owens Associates in Ocean View, DE, and F Randy Vogenberg, PhD, RPh, principal at the Institute for Integrated Healthcare in Greenville, SC.

• Establish a definition of ultra-rare disorders
• Increase incentives to develop ultra-rare disease treatments
• Develop value-based pricing and reimbursement for ultra-rare treatments

Do you think it is possible to execute this proposed reform in practice?

Dr Owens: I think it is reasonable to define ultra-rare diseases using global statistics, if possible, to avoid under-sizing the populations that are rare in the United States but not necessarily elsewhere. Many therapies have been developed in, for instance, cancer, that become rare diseases simply because they target a subset of a larger family of cancers—non-Hodgkin lymphoma is an example.  

While we should be sensitive to these patients and their needs, I think creating incentives in the private sector to target ultra-rare conditions is reasonable. Public or government funds may be better used to target populations and diseases with larger numbers and high needs. Antimicrobial treatments fall into this category.

Dr Vogenberg: Candidly, I do not think there is much interest in expanding the number or use of these high-cost products, particularly from an employer perspective. Employers do not understand much of this in the first place, let alone the details of a narrower definition. They are not seeking to expand development of these drugs at the current catastrophic price levels seen in claims. This is especially true if it involves maintenance treatment. With curative therapy the view might be different.

Dr Karnack: I understand the need for a more precise definition of a rare disease, but, from a clinical standpoint, it’s not that straightforward. For starters, many individuals with rare diseases have other comorbid conditions.  The rare disease can cause a variety of symptoms that can often lead to a complicated diagnosis or a diagnosis of omission. For example, it can be difficult to define certain mitochondrial and neurologic diseases. A change in a disease definition can impact coverage that can further cause a lifestyle change which challenges patients, practitioners, and caregivers.    

In the real world, access to these rare drug therapies is paramount, but a narrower definition can limit that access. Drugs used for these conditions are often unlabeled and/or not FDA-approved for the rare indication, which presents coverage challenges. Oftentimes you must rely on specialty and coding expertise, if available, to ensure access and coverage.  

If this proposal was adopted, what kind of impact would it have on key stakeholders?

Dr Owens: I really don’t see much changing here in cost. There will still be high-cost treatments for ultra-rare diseases that payers will cover for a specific population. Overall cost for treating these diseases in the aggregate will continue to rise.

Dr Vogenberg: For payers, this proposal would expand their revenue based on [increased] claims. On the provider side, they are becoming more critical and skeptical of the value of these products given the cost and lack of or limited efficacy they see in some of their patients.

Dr Karnack: There are a lot of moving parts when disease definitions are clarified or changed. Trying to draw the line between an ultra-rare form of a neurologic or mitochondrial disease—mitochondrial neurogastrointestinal encephalomyopathy, for instance—and a more common neurologic disorder is challenging for general practitioners and even for specialists.

Pharmaceutical manufactures and pharmacy benefit managers (PBMs) will need to have access to experts on hand to help implement these definition changes and assess the impact on coding.  If not, patients, providers, and payers will face a dilemma due to inadequate documentation.  

• Establish a maximum revenue threshold to be eligible for Orphan Drug Act (ODA) incentives
• Assess FDA standards for defining distinct diseases
• Eliminate 340B exclusions for partial orphan drugs

Do you think it is possible to execute this proposed reform in practice?

Dr Owens: It should be easy to identify indication expansion into diseases that are not rare. In fact, even if the indication expands to multiple rare diseases and that expansion results in the aggregate total number of patients exceeding the threshold, I think that should result in removal of incentives. 

Dr Vogenberg: However easy it might be, from an employer perspective, I do not see this happening, for reasons I explained previously.

Dr Karnack: Setting some limits on incentives for partial orphan drugs makes sense since, unfortunately, pharma has taken advantage of this provision in the past. Industry leadership should demonstrate understanding of the intent of incentive guidelines, using them to improve patient access and not take advantage of, for example, children with rare diseases, to improve their bottom line. Before expanding an indication, I suggest answering these 2 questions:

• Is it ethical to expand indications of an orphan drug just to improve revenue generation? 
• If so, is the revenue generated then used to improve access of this orphan drug to individuals with the rare disease in question?

If this proposal was adopted, what kind of impact would it have on key stakeholders?

Dr Owens: Ultimately, this can result in savings by decreasing the cost of an expensive product when use expands. This should have minimal impact on patient access and may improve it by lowering out-of-pocket costs for patients.

Dr Vogenberg: I see a similar impact here as with the first proposal, particularly for payers and providers.

Dr Karnack: It makes sense to fine-tune thresholds that determine ODA incentive payments, but pharma companies and PBMs will not like that, for obvious reasons. Better defining distinct diseases would also help. It’s challenging, but payers would benefit from it. Ending 340B exclusions for partial orphans is appropriate, but pharma and PBMs will not like this, either.

• Update International Classification of Diseases (ICD)-10 codes to better reflect rare diseases
• Fund patient registry development, which can improve the reliability of real-world evidence
• Classify evidence expectations

Do you think it is possible to execute this proposed reform in practice?

Dr Owens: This is probably the most practical suggestion in the ICER report. These populations are sufficiently small that ongoing evidence from registries would be able to demonstrate whether the product is meeting the needs of the patients using it. We have been lax at monitoring and following up on accelerated approvals. ICER reports that just three-fourths have gone on to full approval. It is important to know that these products perform as stated and that they continue to provide benefit over time, something we often don’t know now.

Dr Karnack: On an international scale, it is sometimes difficult to agree on changes of classifications due to differing opinions on symptoms and prevalence in diverse populations. Look at some of the difficulties importing insulin from Canada. However challenging, an update detailing advances in diagnosing and classification of rare diseases should be undertaken based on science.   

If this proposal was adopted, what kind of impact would it have on key stakeholders?

Dr Owens: Patients should benefit from this proposal by not taking medications over a prolonged period if they are not as effective or safe as originally thought.  This would also potentially produce cost savings, as well.

Dr Karnack: On a practical level, I wonder how long it would take to update ICD-10 codes? Stakeholders may end up waiting in a way we wait for something to wind through the court system. It may take years. Moreover, I fear that these new classifications may limit patient access in some countries and regions. New definitions may help providers, PBMs, and payers further limit patient access and simply improve their bottom lines.  

• Expand outcomes-based contracts
• Use indication-based pricing
• Pursue value-based pricing
• Implement volume-based contracts
• Establish a national treatment benefit for rare conditions

Do you think it is possible to pull this off in practice?

Dr Owens: These make sense in theory, but keep in mind that there are currently hundreds of rare disease drugs. I am not sure payers want to negotiate, monitor, and track outcomes across this rather broad category of medications and the individuals they treat. 

Dr Vogenberg: Pricing is a major concern across private and public sector plans and remains unsustainable, even under these proposed systems.

Dr Karnack: In an ideal world, tackling the challenge of rare disease drug policy would include multiple systems, but that can get very complicated and convoluted. It reminds me of the US federal tax system.

In your view, which policy or policies are most doable and beneficial?  

Dr Owens: I find the concept of volume-based agreements interesting as that is a relatively easy way of dealing with indication expansion to more common conditions. These agreements would have built-in mechanisms to decrease prices as the volume of patients increases such that the disease is no longer considered rare. They are likely to be easier to track and implement compared to outcomes-based agreements. Indication-based pricing is still somewhat hard to implement with today’s systems and would require systemic coding and billing changes to implement effectively.

Dr Vogenberg: Each of these systems require better data and collaboration with manufacturers than what currently exists in the market. Moreover:

• Outcomes-based contracts have limited generalizable value
• Volume-based contracts and indication-based pricing do not work well with rare disease categories
• Value-based agreements would not be beneficial short-term, and the long-term impact is uncertain
• A national program is unlikely to be successful, given the poor track record seen with this kind of program to treat hemophilia, as well as this country’s response to the pandemic

Dr Karnack: Each stakeholder may prefer a different system. Patients may like volume-based due to better or easier access and possibly cheaper pricing. Payers may prefer indication-based to limit their vulnerability via coverage limits. Caregivers would likely desire outcomes-based due to better quality of life. Industry may select value-based due to the opportunity for higher pricing. 

An updated or revised national treatment program for rare disorders could interface better with the Children’s Health Insurance Program, but this would be complicated. There are many hoops to jump through for practitioners trying to provide appropriate care for these individuals.